Baker's Men's Wear has a 5.5%, semiannual coupon bond outstanding with a current market price of $978.90. The bond has a par value of $1,000 and a yield to maturity of 5.76%. How many years is It until this bond matures?

Question

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The correct answer is A because the bond has a yield to maturity of 5.76%, which is greater than the coupon rate of 5.5%. This means that the bond is selling at a discount, and the number of years until maturity can be calculated using the following formula:Number of years until maturity = (Par value - Current market price) / (Coupon payment * (1 - (1 + Yield to maturity / 2)^(-2 * Number of years until maturity)))Plugging in the given values, we get:Number of years until maturity = (1000 - 978.90) / (55 * (1 - (1 + 0.0576 / 2)^(-2 * Number of years until maturity)))Solving for the number of years until maturity, we get:Number of years until maturity = 11.10 years

Baker's Men's Wear Has a 5